Holyrood loses power to raise the Tartan Tax

THE Scottish Government has lost the power to raise the "tartan tax" for the next three years, Scottish Secretary Michael Moore has confirmed.

The arrangements, which allow Scottish ministers to raise or lower income tax by up to 3p in the pound, were "allowed to lapse" in 2007, Mr Moore said yesterday.

Opposition leaders accused the SNP of "killing off" the power, which was voted for by Scots.

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The Scottish Government told UK ministers in August it was not going to pay for HMRC to work on the PAYE systems to allow the power to be used after next May's election. Any incoming administration will now not be able to use the power until 2013-14.

Mr Moore said: "It is now clear that, because the system has not been maintained at the previous ten-month readiness, HMRC would require two years' notice to invoke the SVR (Scottish Variable Rate).

"I am conscious that the various political parties will be considering their policy programmes for next year's Holyrood election. I felt it was imperative to inform them that this tax power, which formed part of the original devolution settlement, is not available to whoever forms the next Scottish Government."

He has written to opposition party leaders at Holyrood to set out the situation.

Scots voted for the Parliament to have tax-raising powers in a specific question which was part of the 1997 referendum on devolution. Finance secretary John Swinney told MSPs in his Budget statement that the government would not be raising the SVR.